"Paradigm shift" is here! Security amid soaring oil prices—New energy!
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The situation in the Middle East continues to escalate, unexpectedly becoming a powerful catalyst for global clean energy investment. Since the US-Israel-Iran conflict, the three leading Chinese battery and energy storage companies have outperformed international oil giants, reflecting the market's deep bet on a long-term transformation of the energy structure.
Since the outbreak of the conflict at the end of February, the stock prices of CATL, BYD, and Sungrow have risen by 20.76%, 15.35%, and 20.14% respectively. In the same period, although international oil prices have increased by 47% cumulatively, the stock prices of ExxonMobil, Chevron, Shell, and BP have all significantly lagged behind those of the aforementioned Chinese companies.
Concerns about energy security are reshaping investors’ asset allocation logic. Huaxin Securities believes that this round of Middle East conflict has escalated from a geopolitical event to a systemic shock to the global energy supply system, making energy security logic the main theme for medium- and long-term pricing. Li Shuo, Director of the Climate Center at the Asia Society Policy Institute (ASPI), stated that recent attacks targeting LNG infrastructure in the Gulf region have profoundly revealed the systemic risks inherent in fossil fuels.
Energy security becomes the main theme for long-term pricing
The core impact of this round of conflict has gone beyond short-term oil price fluctuations and shifted to a systemic re-evaluation of the “security attributes” of the global energy system.
The Strait of Hormuz handles about 20% of global oil and gas transportation, and its vulnerability being fully exposed fundamentally impacts the traditional “low cost + high efficiency” global energy allocation model. Huaxin Securities points out that the uncertainty of energy supply is being fully transmitted from oil to natural gas, electricity, and even industrial product prices, and the energy issue has been upgraded from a single resource constraint to a core macroeconomic variable.
Risks are particularly pronounced for Asian economies highly dependent on Middle Eastern energy imports. About 95% of Japan's and 70% of South Korea's crude oil imports are from the Middle East, and 20% of South Korea's natural gas imports also come from the region. If the Strait of Hormuz were to be blocked for a long period, the economies of these countries would suffer severe shocks, with a direct negative impact on GDP.
Li Shuo stated that recent attacks on LNG infrastructure in the Persian Gulf highlight the “inherent risks of fossil fuel dependency.” He warned that East Asian countries with the highest dependence on Middle Eastern LNG imports, despite being geographically distant from conflict zones, will still face incalculable economic shocks.
The energy paradigm is changing
In the face of energy security threats, policy preferences in various countries have clearly shifted towards “autonomous control + diversified alternatives,” including boosting domestic energy supply, strengthening strategic reserves, and accelerating construction of new energy systems. This shift is reshaping global capital expenditure directions and directly driving a revaluation of the clean energy sector.
Neil Beveridge, Head of Bernstein Energy Research, predicts that as the world’s largest oil importer, China will further strengthen its “comprehensive electrification” strategy. He notes that other major Asian economies like Japan and South Korea will also accelerate their deployment of clean energy and clean fuels. “This fundamentally changes the entire energy paradigm,” he says, “Even if the war ends next month... there’s no turning back.”
From the demand fundamentals, the proportion of renewable energy generation continues to rise, directly driving demand for grid-level energy storage. According to research firm Mobility Foresights, China’s domestic grid-level energy storage market alone will surge from $48 billion last year to $199 billion in 2032. In addition, the rapid expansion of data centers is another important driver for battery storage demand.
“Energy autonomy and control” becomes the main line of investment, three directions see strategic opportunities
With energy security logic in the lead, Huaxin Securities believes “energy autonomy and control” will be the core investment theme for the coming years and identifies three key directions.
In new energy generation, under the combined pressure of external energy shocks and the goal of carbon neutrality, renewable energy such as wind and solar power, with both cost advantage and strategic value, becomes a key path to reduce import dependence. The demand center of the related sectors is expected to shift significantly upward, elevating their strategic priority.
In energy storage, as the energy structure shifts towards renewables, the problem of volatility and instability in power supply is becoming more prominent. Coupled with “supply guarantee demands” under extreme supply shocks, the strategic status of storage in peak regulation, backup, and emergency protection continues to be strengthened, with business models and profitability expected to improve simultaneously.
For power grids and electrical equipment, whether it’s large-scale integration of renewables or regional energy security redundancy, higher-level transmission and distribution capabilities and intelligent dispatch systems are needed. Huaxin Securities believes that ultra-high-voltage, grid upgrades, and digital grid investment may enter an accelerated cycle, and related companies will directly benefit from the speed-up in building new power systems.
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